Spanky,
Sounds like an employee to me too.  How about paying them as a consultant,
and sending a 1099 at the end of the year.  You could document their "non-
employee" status by using a consultant form thus avoid having to actually
provide the fringes and worker's comp.  Also having them sign the consultant
waiver gets you out of having to withold taxes.  Have you run this type of
arrangement by Americorp?

Rebecca Bacon
EVMS